Retiring boomers driving small business sales

Buyers appear to be ready to step up and are looking for companies that will be good fit with their existing operations. Health-care related businesses like medical billing firms, pharmacies and even medical and dental practices are particularly in demand, says Keystone’s Richards. He’s seeing less interest in restaurants and retailers, industries where profit margins are thinner and where many companies are still struggling. Schuster, the Miami broker, says he sees people who were waiting for the economy to pick up, and they’ve decided that business is good enough for them to take the plunge.

“There’s a lot of people who were sitting the sidelines and could not do that anymore — the election’s over and things are getting better,” he says.

Sellers are benefiting from this trend because buyers are willing to pay more money if a deal will quickly get them into the markets they want to serve, says Mike Carter, CEO of BizEquity, a company that helps businesses calculate their sales price.

“For a growth company, we’re seeing them getting almost 15 percent more than what they were getting four years ago (during the recession),” he says.

Creative Kidstuff, a toy retailer based in Minneapolis, just expanded by buying a 26-year-old online and catalog toy retailer, Sensational Beginnings. Roberta Bonoff, CEO of Creative Kidstuff, said the owner was tired and ready to sell. Bonoff declined to disclose the purchase price, but said “everybody walked away from the purchase with their needs met.”

Both companies serve similar markets, but 87 percent of Creative Kidstuff’s revenue comes from its six traditional brick-and-mortar stores. Buying Sensational Beginnings will allow it to expand its online operations.

“We just found this as an opportunity to grow our online business and theirs and have more people get to know who we are,” Bonoff says.

She has her ear to the ground for more opportunities to expand.

“When the opportunity looks like the right fit, we’ll do it,” she says.

BCER, an engineering firm in Arvada, Colo., bought another engineering business, Rimrock Group, which specializes in designing technological systems for new buildings and renovations. The purchase allowed BCER to immediately expand into an area of expertise it didn’t have — and that would have taken it years to develop by putting a staff together one by one.

“Growing things organically is very difficult,” says Marc Espinosa, president of BCER. “I had been discussing seriously for two years, how could we develop this specialty in our company?”

Some buyers are looking to expand into a new geographic area. Jodi Hamilton now owns both of the Dream Dinners franchises in Chicago, giving her the entire territory for the stores where customers assemble ingredients for dinners that they can pack up and take home to cook. Hamilton opened a store two years ago in the city’s Ukrainian Village neighborhood, and hoped to expand at some point. Then earlier this year, the owner of a Dream Dinners in the Roscoe Village neighborhood approached Hamilton and asked if she wanted to buy her store.

It took Hamilton only about a week to say yes. She nailed down a private loan, and closed the deal.

“It was too good an opportunity to pass up, knowing that we would have the entire Chicago market,” Hamilton says.